Investment Rating - The investment rating for J&T Express has been upgraded from Hold to Buy [1][2]. Core Insights - J&T Express achieved a net profit of 31millioninthefirsthalfof2024,asignificantimprovementcomparedtolossesof264 million and 168millioninthefirstandsecondhalvesof2023,respectively[1].−Thecompanyisonaclearerpathtosustainableprofitabilityduetoongoingcost−cuttingtrendsinSoutheastAsiaandChina[1].−Revenueforthefirsthalfof2024grewby221.52 billion, driven by a 42% increase in parcel volume, although this was offset by a 14% decline in average selling price (ASP) [1][6]. - The target price has been adjusted to HK10fromHK12.80, reflecting a more conservative valuation approach post-industry correction [1][10]. Southeast Asia Performance - In the first half of 2024, revenue in Southeast Asia increased by 22% to 1.52billion,withparcelvolumerisingby420.74, while market share increased by 2 percentage points to 27.4% [1][6]. - The unit gross margin only declined by 8% year-on-year to 0.14duetoa163 billion in the first half of 2024, supported by a 37% increase in parcel volume to 8.8 billion units [1]. - The ASP remained stable at 0.34,withmarketshareexpandingby1.1percentagepointsto110.02 per parcel [1]. New Markets - Revenue in new markets surged by 120% year-on-year to 292millioninthefirsthalfof2024,drivenbya64186.5 million in FY24E and $495.6 million in FY25E [2]. - The company is projected to achieve a P/E ratio of 39.7x in FY24E, decreasing to 15.2x in FY25E [2]. Valuation Methodology - The target price is based on a sum-of-the-parts (SOTP) valuation approach, applying different EV/EBITDA multiples for various markets [10][11]. - Southeast Asia is assigned a target P/E of 15x, reflecting a premium due to competitive advantages and market share growth [10]. - The valuation for China has shifted to an EV/EBITDA approach, applying a target multiple of 10x, which is approximately 50% higher than local peers [10].
